Tuesday, May 4, 2010

“$hhh!” A Thieving Developer Wants Daniel Goldstein Quiet About Its Misdeeds, Meaning the Atlantic Yards Fight Ain’t Over

We are going to point out something extremely odd that the media has failed to notice for all its willingness to frenzy itself in reporting about the settlement whereby Daniel Goldstein’s finally received money from Forest City Ratner to move out from his apartment in the proposed footprint of Atlantic Yards.

After nearly seven years of fighting to stay in his home Mr. Goldstein, already stripped of his home ownership and facing imminent eviction as eminent domain was being wielded against him to build the basketball arena that is proposed to be owned by Forest City Ratner and a Russian close-to-the-Kremlin oligarch Mikhail Prokhorov, agreed to the compensation figure he would receive. That compensation turns out to amount to far less than that value of his property’s development rights and therefore far less than the value of what was taken from him, far less than the value of what we think he should have been entitled to. More on this further in.

The thing that was so odd in this process and about which the media yet failed to report is how important it was to Forest City Ratner to attempt to deprive Daniel Goldstein of his right to speak out against the project. Because of the way it was negotiated, with Daniel Goldstein stoutly refusing to give up his free speech rights, we will never know the exact dollar value Forest City Ratner put on his unrelinquished rights. We would have been thrilled if Mr. Goldstein had played the negotiations in a way that teased out that precise figure before he rejected it but had he been so clever he could have run the risk of appearing unprincipled and insincere to the judge.* Nevertheless, the fact that Forest City Ratner pressed hard to deprive him of his rights, enlisting the weight of the state and Judge Gerges in the negotiations to do so, has to be viewed as highly significant and startling.

(* Mr. Goldstein did find himself in a bit of an ironic PR box: It seems the more principled one is, the more altruistically principled people want you to be. Some thought Mr. Goldstein should have taken none of the compensation that was offered late in the game and should have been led out of his apartment in chain gang-style with the rest of his family.)

Before we proceed, we like to offer an analogy . . .

Daniel Goldstein as Dachshund

I grew up in a grand old building, 34 Gramercy Park, the oldest continuously co-op building in the city of New York, and I have this vivid recollection of growing up. We had a pet dachshund, a standard, who with his short legs stood about 11 inches high. There was also in the building a Great Dane who at the time of this story, when I was not yet a teenager, stood chest-high, almost shoulder height to me. One day, as I stood with our leashed dachshund waiting in a just-descended elevator, the elevator door opened and, inches away, the Great Dane was on the other side of it. The Great Dane was instantly, absolutely terrified. It heaved itself backward and upward its legs, backpedaling frantically, losing traction on the slick ceramic tile of the floor but managing with constantly reapplied effort to keep sending itself skidding in reverse. Its owner was dragged backward by the leash he was holding. Within seconds the Great Dane was four or five yards back, its body still an unscrambled tangle of desperately wheeling legs. There was an enormous piece of Victorian lobby furniture behind it, the largest and heaviest carved table you can imagine. The Great Dane crashed into it and the table and the enormous table lurched. One of the massive ornate armchairs beside it toppled sideways, the other bounced away several feet. The huge vase of flowers on top of the table flew into the air and smashed to the floor. And my dachshund? He was still standing in the doorway of the elevator exactly where he had stood moments before with a look on his face like, “What happened?”

This is not a perfect analogy but it should get us off to a start. (BTW: Did you happen to notice that convention dictates that “Great Dane” be capitalized but “dachshund” not?)

Corporate Speech Megaphones: Forest City Ratner as Great Dane

With the Citizens United case recently decided by the U.S. Supreme Court, the nation focused a lot of attention on the disproportionate power of corporations when it comes to free speech. The concern people have involves the corporate megaphone theory: that when government can’t limit corporate spending on elections, politics and public governance decisions, corporations will be able to drown out all other voices. (Another concern is that corporations which are substantially less complex than living, breathing, flesh, blood, sweat and tears human beings, are mono-motivated: Corporations can only see profit. They may need to steer clear of breaking laws but they do not come equipped with consciences.*)

(* One proposal for reform requiring shareholder approval of political spending might begin to address that kind of concern.)

We don’t know what your general personal assessment of the cooperate megaphone theory might be but you can consider the following to evaluate how figuratively or literally true it is in regard to Forest City Ratner’s promotion of Atlantic Yards. The recent ‘groundbreaking’ for the proposed Prokhorov/Ratner basketball arena involved an event with a stage, microphones, an amplified public address and sound system, elaborately produced videos projected on a screen, in addition to having Mayor Bloomberg, Governor Paterson and Borough President Marty Markowitz speak. Ratner also featured rapper-entrepreneur-Atlantic Yards-investor Jay-Z and his multi-Grammy Award-winning wife Beyoncé, who in another venue was brought in to spiff up Hugh Jackman’s performance at the academy awards. It is worth contemplating, in connection with this Brooklyn-destroying appearance of Beyoncé, that Forbes listed her fourth* on its list of the 100 Most Powerful and Influential Celebrities in the world.

(* Atlantic Yards Report in its coverage of this post adds that “Jay-Z was number 32 on the list.”)

The speakers were all salaried and doing their jobs or compensated in one manner or another. Those who were just there to gawk or who were amongst the press getting publicity handouts were fed (turkey and lobster roll sliders, and chic little dessert thingies in cocktail glasses) and sent away with PR swag. Those who consented to wield a groundbreaking shovel took it away as a silverized, engraved souvenir.

By contrast, the unpaid crowd of protesters outside, who certainly all had a great deal to say, did not have corporate dollars and publicly provided subsides to amplify their voice. This outside crowd may have been the larger and its views of the shenanigans going on more trenchant but the police arrested one man for making protest noise by playing a tambourine (an “amplified drum”). So much for an amplified voice! The police were specifically admonishing those of us who were protesting not to use any mechanical assistance as we raised our voices. Nevertheless, because of our numbers we were heard over the charade inside though a lot of us were hoarse for days.
Our crowd was huge but we might have been outnumbered by the police. At one point I carefully counted aver 100 police standing in Atlantic Avenue on our side of the block. I mentioned that count to another urban planner present who pointed out that there were even more police if I looked elsewhere: A lot more. Indeed there were. There were many more visible on the other side of the block. And when I looked up I noticed that there was a small swarm of officers stationed on top of the buildings as well. My companion noted that the police had sent out the anti-terrorism unit (even though the arena had been largely ignored as a terrorism threat.) By comparison, a public town forum held by Governor Paterson the preceding Monday had virtually no police presence.
The police apparently going on automatic about standard procedure were telling the protestors to move back and confine themselves “to the sidewalk” which, ironically, was not possible since Ratner had removed the sidewalks and taken over the space where they used to be with a proprietary fence, thus symbolically emphasizing how eager the Bloomberg administration has been to give the public’s sidewalks, streets and avenues over to this developer. Not only are sidewalks, streets and avenues being permanently given to developer at no cost, they were turned over to the developer back in the beginning of March with that conveyance (and the “groundbreaking”) occurring even before it was known whether it will be possible to build the arena. Even today in May, almost two months later, it is not known whether the arena can be built although the “odds” are that Prokhorov will be approved by the NBA and that it will ultimately proceed. (See: Wednesday, January 27, 2010, At another meeting on AY street closings, FCR's Marshall faces some tough questions from the crowd.)

Protestors were advising the police that even though the police had been directed to focus their attention on the protestors the real crimes (the “amplified drum” aside) were going on inside the event. The police were most mostly good-natured upon being so informed.

There was also a crime going on in certain news rooms in terms of the coverage of the event. As Norman Oder of Atlantic Yards Report wrote:
. . . the New York Times sent a reporter to the Atlantic Yards groundbreaking who had never covered AY before, as if this were some spot news story that any warm (journalism degreed) body could have handled.
(See: Monday, March 15, 2010, The New York Times and Atlantic Yards: A Pattern of Inadequate, Misleading, Mostly Uncritical Coverage. Still and Monday, March 29, 2010, A Very Brooklyn Passover Haggadah and the world of Internet content.)

Suffice it to say, the media paid too much attention to the Great Dane of Ratner’s manufactured and paid-for hoopla and too little attention to the substance of the debate.

(For more on the Groundbreaking see: Friday, March 12, 2010, Team hype: pomp and (questionable) promises, bitter (and near-final?) protest mark ceremonial groundbreaking for Barclays Center arena.)

Why Does the Ratner Great Dane Fear the Dachshund?

So why is Ratner so afraid of the exercise of Daniel Goldstein’s comparatively small dachshund-size free speech? One answer can be found in who was not there at the groundbreaking: None of the local politicians representing the community were there. Ratner may have pocketed Bloomberg and the pathetically weak Paterson, he may have Markowitz on his payroll with contributions to his pet charities-used-for-politics, but the crowd outside protesting reflected the local community. The image we used of Daniel Goldstein-dachshund vs. Ratner’s Great Dane-sized PR machine may make Daniel appear rather outmatched but when it comes to bark and bite Daniel’s bark has the bite of truth. By contrast, the Ratner PR machine has the job of selling fictions. To see an assembled list of the pack go here: Tuesday, December 1, 2009, Unfair Substitution of Fiction For Fact in the Atlantic Yards Dialogue. Selling those fictions means that Ratner can’t have (to invoke another overworked metaphor) the little boy making the simple but powerful statement that the emperor has no clothes.

The Atlantic Yards Fight Ain’t Over

Ratner not only cares about what Daniel Goldstein says, it is important to note that Ratner cares now, today and going forward. In this regard, the Brooklyn Paper which did publicize Ratner’s efforts to negotiate away Goldstein’s free speech rights (though in self-confessed he-said/she-said fashion: “this she-said, they-said story”) published two stories by Stephen Brown with antithetical facts, or at least with one having an antithetical headline. Their story about the settlement contained the following:
“The money amount was settled pretty quickly,” Goldstein said. “The sticking point that led to nearly four hours of discussions was Ratner’s insistent desire to bind me to some sort of gag order.

“Apparently, taking my home and razing my neighborhood wasn’t enough for them,” he added.

The lawyer backed up his client.

“The money was never the problem!” said Rikon. “For [Gilmartin] to say that is outrageous.”
(See: Just in it for the money? Ratner Exec say yes but Daniel Goldstein says no, by Stephen Brown, Wednesday, April 28, 2010.)

The other “news analysis” article by Brown assessing Goldstein’s “legacy” was supplied with this headline:
The Yards Fight - - It’s Over: The Goldstein Legacy: Noble activist or sellout?
That article carefully and fairly points out that Daniel’s options were highly circumscribed when he agreed to the settlement (“His decision to not face a physical eviction only avoided a colorful moment for the media, but not much else. Goldstein was left with few favorable options: he could have chosen to fight on and face an eviction date as soon as mid-May and less money for his apartment, or take a more generous settlement. Either way, the state was going to remain his landlord — it took title to his apartment in March.”). Nevertheless, the fact that Daniel was at the end of his personal options in this regard was not grounds for the editor to slap a headline on the story that said: “The Yards Fight - - It’s Over,” discouraging important further reading.

Goldstein Quotes on His Free Speech Accomplishments

If the Atlantic Yards fight is over, past tense, passe, then why would people even bother to read the article which has the following quotes from Daniel within:
“We’ve done a lot of what the media should have been doing — what well established good-government groups should have done,” Goldstein said. “Watchdogging minute details of an attenuated process. Every false statement, exaggeration and broken promise has been exposed.”

* * *

“We have convinced nearly all good people of good will that the project is a sham and a poster child for the wrong way to develop cities,” Goldstein said. “We shined a bright light on the way eminent domain is abused in New York State to the point where there is now a legislative effort … to reform the state’s laws.

“We’ve exposed the way eminent domain is used and abused in New York as a tool for the most powerful interests in the state,” he added. “It’s on everyone’s radar. … I don’t think any developer will try to things this way again.”
Ratner’s Bind When It Comes to Free Speech

Is the Atlantic Yards fight “over”? Hardly. Does Forest City Ratner still care a lot about what Daniel has to say? You betcha. Also from that Stephen Brown article:
Ratner, for his part, has been quiet about Goldstein — though yesterday’s settlement leaves little doubt he gave a lot of thought to this longtime thorn in his side.

The developer’s recent statements have not mentioned Goldstein specifically, but the presence of numerous lawyers and two top executives, Bruce Bender and MaryAnne Gilmartin, at Wednesday’s final negotiating session in Justice Abraham Gerges’s chambers in Downtown reinforce how coveted Goldstein’s Pacific Street condo had become and how badly Ratner needed him out quickly.
It is not just Ratner that wanted Goldstein out of his historic loft building condo, Ratner wanted Goldstein silenced.

Decades Into the Future Ratner Desperately Needs Support

Why? Ratner doesn’t want to see the project broken up. Ratner is going to try and hold on to the development rights for this project for perhaps forty years. Support matters. Ratner can't move one foot forward without huge amounts of subsidy (which other developers will want and need for other projects elsewhere in the city). Support matters. Ratner wants to resist investigations of his actions and possible indictment both with respect to his Yonkers Ridge Hill project and with respect to Atlantic Yards. Support matters. Prokhorov is under attack in the U.S. Congress. Failing some surprises he will probably still be approved. . . But support matters. Support matters a lot and will for decades. And remember that the groundbreaking event was pretty empty of supportive politicians. Ratner’s support has been continually waning.

If, for instance, a possibly wavering Senator Schumer finds himself on the spot once too often (See: Wednesday, April 28, 2010, Schumer Says Atlantic Yards Area Is Not Blighted. Doesn’t See AY As A Ratner Mega-Monopoly, But Could His Support Wane?) and if Schumer realizes that he shouldn’t be ignoring Representative Bill Pascrell’s investigation into the relationship of Mikhail Prokhorov and his firm to sanction-busting and the Mugabe regime in Zimbabwe, if Schumer realizes that Mugabe’s reported secret sale to Iran of rights to mine uranium reserves heats this issue up for him, Ratner would be in trouble, serious trouble.

Ratner’s Negotiations to Limit Goldstein’s Right to Free Speech

The Brown article recounts the mustering of the Ratner forces before the settlement: “the presence of numerous lawyers and two top executives, Bruce Bender and MaryAnne Gilmartin, at Wednesday’s final negotiating session in Justice Abraham Gerges’s chambers , at Wednesday's final negotiating session in Justice Abraham Gerges's chambers.” From our own observation in the courtroom hallways before the settlement, Forest City Ratner Executive VP Gilmartin was the one who was most involved in running the show. State officials hung back observing. One couldn’t overhear exactly what was said but figures were clearly being mentioned by Ms. Gilmartin, “So, he bought it for $600,000. . "

According to Daniel Goldstein’s version of events (in a statement he later got out to the public), while Forest City Ratner was busy zeroing in on the number for settlement and apparently had a press release primed and ready to go, he:
. . did not expect that this argument would then lead to a settlement, so I did not have a press release prepared when an agreement was reached around 3pm. I did not even think of the press implications because I was thinking about my personal situation and my family, not the press. I should have known better because clearly Forest City Ratner saw it as a big press event and sent out a press release immediately.
Indeed, we observed that Forest City Ratner was definitely cooking something up but Mr. Goldstein was in position of having to quietly wait to find out what that might be.

Ratner As Condemnor Controlled the Timing for Seven Years

We have previously written in detail about how one of the ways that the condemnation process is weighted unfairly in favor of te condemnors is the way that the condemnors can pick and chose their time to move, keeping those who are having their property seized on tenterhooks:
If you are one of the condemned, the loss of control over the timing of one’s affairs is a hidden uncompensated loss. It is also a loss that New York State eminent domain compensation procedures unfairly accentuate (one might say manipulate) for the probable purpose of paying condemned property owners even less than they otherwise might be able to negotiate or win in court.

* * * *

Eminent domain acquisitions involve a many-step process with torturous uncertainty for the condemned property owners that is manipulated for the developer’s advantage when property is being taken for private use. To give you an idea, the Atlantic Yards project, which obviously was going to require eminent domain, was announced December 10, 2003, yet the developer was allowed a full three years to negotiate acquisition contracts to its advantage using the threat of eminent domain before the use of eminent domain was officially authorized by a public agency vote on December 8, 2006. Even then it was uncertain when that next step, official authorization, would come . . .
(See: Tuesday, January 19, 2010, U.S. Supreme Court to Get a Doubleheader on NYS Eminent Domain Abuse? Pretext and Lack of Due Process PLUS No “Just Compensation”.)

Ratner Picked the Time

Forest City Ratner was picking its time to make an acceptable offer to Goldstein. As recently as November Goldstein was offered $510,000 for his apartment in the proceeding, an insultingly low figure far below what he had paid for it in 2003 even though the market had gone up substantially since then. The Brooklyn Paper quoted “a condemnation lawyer who is not involved in the Goldstein case”:
“This is such an extreme lowball that it’s startling,” said the lawyer, William Ward. “You’re always going to get a low offer from the condemning authority, but not so extremely low. They’re being very punitive.”
(See: November 17, 2009, Is the state playing lowball with Daniel Goldstein? By Stephen Brown.)

The Unspeakable Being Unacceptable

Throughout this process which began in December 10, 2003, Mr. Goldstein was faced with an unacceptable choice. If he were to have succumbed to threat of selling his home in the face of Ratner’s abuse of eminent domain he would have to have given up his right to say that he has been outrageously screwed by a thieving bastard with the help of the government or to criticize the process in any other way. Notwithstanding, this was precisely the deal many of his neighbors took. Resolute, Goldstein opposed these gag order deals and if he hadn’t, you might never have known about them.

Public Actions Abhorrent to Public Policy

We have written previously to point out that before eminent domain assumed its present-day, developer-driven incarnation, governments did not seek the kind of gag order, nondisclosure or Omertà agreements that Forest City Ratner pursues and obtains. We have recommended that such agreements need to be outlawed as part of eminent domain reform as a violation of public policy. They are designed to sweep the facts and necessary public policy debate under the rug.

By the time it got to Supreme Court Justice Abraham Gerges’ court the only way Forest City Ratner was going to get its gag order agreement silencing Goldstein was if the agreement was obtained, signed and enforced by New York State as its agent. Absolutely outrageously, New York State officials assisted Ratner in the negotiations to pursue this aim. Even worse, the judge participating in the settlement negotiations pressured Mr. Goldstein to accept such a deal. Were we the judge in this case we would have done no more than perhaps stand by as such an odious provision was negotiated, see what higher price for the property was going to be paid by Ratner as a result, and then announce that the settlement deal would be enforced in terms of the amount to be paid but that the gag order part of the agreement would be voided and stripped out of the agreement as against public policy.

But apparently Gerges pressed the agreement, acting as if he didn’t understand why it should be objectionable for Goldstein to agree “not to oppose the project in any way.” Do we want a country where citizens need to be looking over their contractual shoulder when it comes to speaking honestly about how our cities are shaped and the government run?

Money (Intercepted From The Public) Becomes the Absence of Free Speech

“Money = free speech” has been offered as a short-hand reference to the Citizens United case that was recently decided by the U.S. Supreme Court respecting corporate political spending. Well if “Money = free speech,” here we see how the power of corporate spending to buy the government goes one step further to arrive at a different equation: “money = the absence of free speech” for all the rest of us.

Here is what needs to clearly understood about the funding of Forest City Ratner’s purchases to extinguish free speech rights:
• It’s funded by public subsides to Ratner (Ratner is able to do this project and has been pulled back from the brink of bankruptcy only by virtue of public funds and subsides that have been lavished upon it by Bloomberg, Paterson, the MTA and ESDC.)
• It’s funded by the value of development rights and the value of property being seized from the very owners and community members who are silenced.
Unfortunately, the funding also facilitated one thing we are very sorry about which is that when Mr. Goldstein was forced to settle the condemnation proceeding, he also agreed to withdraw his participation in one other related lawsuit which will weaken the community’s chances with respect to it. Might we entertain the pleasant notion that (after Mr. Goldstein has cashed his check) the Gerges court will think to quash this litigation withdrawal agreement because it has been funded with public money?

Did Goldstein Really Get a Good Deal?

The press has taken up some of the PR circulated by Ratner, its cronies and their corporate-megaphone PR machines that Goldstein got a good deal and Goldstein has received some criticism for unprincipledly getting too good a deal. We ourselves opined that the sum Goldstein is getting is “not insultingly small.”
Many of us will necessarily have mixed feelings about Daniel’s settlement. Even though it comes very near the end of much of the most pertinent litigation it slightly weakens the ongoing and essential fight against the Atlantic Yards mega-monopoly boondoggle. But Daniel deserves congratulations for a seven year fight well fought and ought to be congratulated on getting a sum that is not insultingly small.
(See: Wednesday, April 21, 2010, DDDB's Goldstein settles for $3M (or less after attorney's fees), agrees to leave May 7, will take a step back from anti-AY activism.)

We have also said:
Had Mr. Goldstein been able to get an even higher price for his apartment from Ratner it would have been that much better for the community because keeping the price paid high is what it takes to make eminent domain abuse less attractive.
(See: Bertha Lewis, ACORN CEO, Not Happy for Daniel Goldstein, by Eliot Brown, April 22, 2010.)

Which synchronizes with our sentiment that had Daniel litigated further we would:
have loved to see the issue of truly adequate compensation go to the U.S. Supreme Court because it is developer windfall that drives these land grabs and truly adequate and fair compensation for all involved would help take the wind out the sails of a very corrupt process.
But while Mr. Goldstein got a “not insultingly small” amount and took a bit of a bite out of the developer he got little more than the minimum he should have been entitled to and we think that in a more perfect world he should have been entitled to a lot more.

What Did Goldstein Get and What Should He Have Gotten?

Norman Oder in an Atlantic Yards Report piece offered calculations of what Goldstein got by virtue of his $3 million settlement.
$3 million man?

Goldstein, who paid about $590,000 for the apartment in 2003, will not take home $3 million. While I don't know the cut for attorney Michael Rikon (and Goldstein wouldn't specify), another eminent domain attorney told me that the fee is typically one-quarter to one-third of the settlement beyond the initial offer.

With an original offer of $510,000, the additional sum is $2,490,000. Thus, the attorney's fee would be either $622,500 or $821,700.

That would leave Goldstein $2.18 million or $2.37 million. That's approximately double what a commensurate apartment would cost.

So, it might be framed this way: beyond the apartment, Goldstein's getting a $1 million-plus in exchange for activism--with impact much beyond Atlantic Yards--over six years that was barely compensated, plus "punitive damages" for "pain and suffering."
(See: Wednesday, April 21, 2010, DDDB's Goldstein settles for $3M (or less after attorney's fees), agrees to leave May 7, will take a step back from anti-AY activism.)

Hoops to Avoid Substantial Attorney Fees

The only way that Goldstein could avoided the above estimated $622,500 or $821,700 in attorney fees is if he had litigated the compensation issue to a final conclusion taking it through a judgement and appeal that could likely have lasted ten years. In that case he would have been allowed the attorney fees he is statutorily entitled to, but only if he had gotten sufficiently more than the last high offer from Ratner. (Again, we note we have written about how the process is weighted against those who have their property seized.)

The Value of Goldstein’s Apartment In a Normal Free Market: $1,543,469?

Goldstein bought his property for $600,000 in May of 2003. (We will go with the figure we heard in court that day- $601,000- and the $600,000 figure were heard Gilmartin mention in the hallway that day rather than the lower figure sometimes mentioned.) Since that time, the value of his apartment has gone up and down, but mostly up. We are not considering the so-called “holdout” value of is apartment in this regard. (Forest City Ratner was posturing in court that they had put themselves in a box where delay was costing them $6.7 million a month.) Instead we are trying to think in general, more theoretically applicable terms about what the value of his apartment should be Atlantic Yards aside. This means setting aside the fact that the “holdout” value of his apartment increases its value while the very real blight and uncertainty Ratner has brought to the neighborhood has had a depressing value on property there. One should, of course, remember that Mr. Goldstein picked a neighborhood that was doing a good job of being on its economic way up when he moved in, before Ratner showed up to depress property values.

From various sources (such as REBNY reports and reported indexes) we know that in New York apartment prices more than doubled between 2003 and early 2008 and that since their peak they are down again by 25-30%. (They are expected to keep declining for the next two years.)

Going by a REBNY report, that would mean that Mr. Goldstein’s apartment escalated in value to about $1,543,469 by early 2008 though its value would subsequently have come down. Back in its November article about how little Goldstein was then being offered in the proceeding, The Brooklyn Paper reported on the price the apartment was estimated to have currently declined to (which is still more than Goldstein paid for it):
One local broker, Jesse Temple, said that such a unit — in a desirable area such as Prospect Heights — could fetch $825,000 to $900,000.
That $900,000 actually works back to a roughly similar 2008 value ($1,285,714) if you calculate accounting for the recent 30% drop. That means that if Goldstein is getting the
net figure calculated by Atlantic Yards Report of “$2.18 million or $2.37 million” that Goldstein is picking up at least about $636,500 over what he his apartment would have been worth in 2008 if nothing else (including zoning) had changed. (It is not as if nothing else changed or factors in as we will get to in a moment.)

Handing Out the Benefit of the Doubt When Ratner Runs the Show

Of course all these figures leave a lot of room for speculation and fair price to Golstien might be much more or could be less and why, one might quibble, would one even think that Goldstein should be paid what his apartment was worth in 2008? Why? Because when Forest City Ratner takes control of the market for Goldstein’s apartment for seven years, when they get the exclusive right to chose the exact time of the sale (rather than Mr. Goldstein), why shouldn’t the benefit of all the doubt be in Mr. Goldstein’s favor and against them?

Under the pending threat of condemnation, for almost seven years Goldstein couldn't sell his apartment. In 2008, he had no ability to sell his apartment whether he wanted to either by happenstance or because of his perspicacity in understanding the market. As it turns out 2008 was the year that Goldstein and his relatively new wife had a baby, an event that is often associated with a change in homes, which means maybe he would have been impelled to sell at the top of the market. (See: November 25, 2008, And baby makes three! By Sarah Portlock., The Brooklyn Paper.) In point of fact though, probably, all other things being equal, Goldstein would not have sold his apartment at that time because a three bedroom, two bath, 1,300 square foot, 7th floor apartment with 10 foot ceilings and in-unit laundry in a newly converted historically significant warehouse-style building with superb public transportation was in all likelihood quite suited to his needs for years to come. Something superior or equivalent to it elsewhere was likely to be non-existent. But if he knew he had to sell in 2008 and could have picked his time perhaps he would have.

Other Costs

All of the above does not even get into something else: all the social costs to an individual or family when they are forced against their will move prematurely or at a time that is not of their choosing. It ranges from whether one got a good mortgage rate (perhaps paying it down with points) to the school you might have to pull your child out of, to whether you have found a good local bar like Freddy’s where (in Jane Jacobs terms) you have found a trusted bartender to hold your keys. The list of these things is endless.

The ESDC “Upzoning”

Was that extra $636,500 that Goldstein received over what the market might have given him, if it had been allowed to behave normally, enough? We would argue that it wasn’t. In a fair world it was far too low. The property, through an ESDC zoning override, was being upzoned. This means that the value of the apartment should not be gauged by what actually existed there but by what could replace it with the zoning increase. This is the way we previously expressed it:
Ratner megadevelopment involves an override of local zoning and procedures whereby Ratner is proposing to ultimately create the densest area in North America. Goldstein’s nine-story building is supposed to be replaced by a forest of 50- and 60-story buildings. Assuming, conservatively, that Goldstein’s apartment will be replaced by development that is four times the current density, and assuming conservatively that we should use the $850 p/s/f condo figure, this increase in density transmutes the square foot value of Goldstein’s apartments in development terms to $3,400 p/s/f ($850 p/s/f times 4). Then the gap between what Ratner is offering Goldstein and what the unit is really worth is $450 vs. $3,400 p/s/f.
(Sunday, November 1, 2009, Compensating Justly? What Is the Property Being Condemned at the Atlantic Yards Site Really Worth?)

Admittedly, some adjustment downward from this higher value ought to be made to account for the cost of demolishing an existing building (one newly renovated and of historic value) and to newly construct the bigger buildings. (A better style of development involves interweaving preservation with the denser construction and transferring development rights paying the owners of Daniel’s building for them.) Higher density also has its diminishing returns including its lesser appeal in Brooklyn so this too ought to be accounted for. Still, the bottom line is that the zoning increase makes Mr. Goldstein’s property far more valuable than what was paid for it.

Public Policy on Developer-Driven Eminent Domain Coupled With Upzoning

Developer-driven eminent domain is now typically coupled with upzonings precisely because preferentially handing out such upzonings to the initiating politically-connected developer provides the monetary profit to fuel and pay for the eminent domain abuse. We, however, have made the case that all the value of upzoning should go to the owners originally in place:
If the density of the property is being increased to the density that reflects good city planning, then it should be considered that this was an increase that should have been anticipated and expected from the government. If the increase should have been expected upon request from the government and it can therefore be considered “probable” then there is case law that says that the upzoned value needs to be taken into account when compensating the original owners.
(For more of this analysis: Tuesday, January 19, 2010, U.S. Supreme Court to Get a Doubleheader on NYS Eminent Domain Abuse? Pretext and Lack of Due Process PLUS No “Just Compensation”.)

Was Goldstein therefore compensated enough? Would the amount he received in compensation be enough to dissuade a developer from coupling eminent domain abuse with a density increase to make the initiation of a seizure of your home highly profitable? Hardly. Was the amount Goldstein finally negotiated nearly as big a bite as Goldstein, under enormous pressure and facing significant personal risk, could take out of the developer in a system that is so unfairly weighted in favor of politically connected developers seizing land from the rest of us? We think he got about as much as he could under the circumstances.

Who Has What to Be Proud Of? The Illuminating Irony of Bertha Lewis’s Attempted Goldstein Critique

Something Goldstein has to be really proud of is that with all the Ratner money that sloshes around to buy people’s silence and complacency in the face of the thefts from the community, he did not accept any of it.

It is ironic and probably extremely telling that the most venomous criticism of Daniel Goldstein settlement comes from someone who sold Ratner the rights to her free speech years ago: Bertha Lewis, the head of ACORN, (now rechristened New York Communities for Change in a tactical evasion of PR shame). Ms. Lewis, theoretically a booster of Atlantic Yards, sold her rights at the very outset of the Atlantic Yards and so has been unable to criticize the project even as it became clear what it really was and even as it has degenerated with subsequent revelations into something far worse. Accordingly, we provided the following comment to Eliot Brown’s April 22, 2010 story in the Observer about what Ms. Lewis had to say:
Regarding Bertha Lewis's vitrolic remarks about Daniel Goldstein. DDDB's Daniel Goldstein has a lot to be proud about that ACORN's Bertha Lewis does not. For one thing, Daniel didn’t sell his first amendment rights to Forest City Ratner: Ms. Lewis did precisely that. Daniel can say whatever he honestly thinks about Forest City Ratner or about Ms. Lewis. Ms. Lewis contracted away her right to say anything critical about Forest City Ratner or to urge a better, corrected or amended project. It is not clear she even has the right to say positive things about Daniel. She may find all this rankling inside her contractually confining cage. For more about how she signed away her right to defend the community see the two links at the end of this comment.

Next, Daniel didn’t sell out the community and shill for Forest City Ratner’s plan to do only the bare bones minimum that the tax code requires combined with what for economic reasons the market would pretty much dictate that Forest City Ratner would pretty much do anyway in terms of renting apartments. Ms. Lewis did essentially that: Bottom line, she negotiated for the community to get nothing at all. Mr. Goldstein fought for and achieved a lot for the community and it is very important that he, unlike Ms. Lewis, can still be a voice to criticize Ratner on the community’s behalf to achieve more. BTW: Had Mr. Goldstein been able to get an even higher price for his apartment from Ratner it would have been that much better for the community because keeping the price paid high is what it takes to make eminent domain abuse less attractive.

Saturday, June 28, 2008

Thursday, July 24, 2008
(See: Bertha Lewis, ACORN CEO, Not Happy for Daniel Goldstein.)

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